Main navigation

If You Work Your Whole Life, You’re Doing It Wrong

I thought it was normal to hide in the back of a station wagon when my dad checked into a motel.

Growing up, the biggest vacation we took was to Disney World. We drove to Florida from Illinois and to save money he’d reserve a room with two double beds for two people. After he got the key me and my two sisters would sneak into the room so the manager wouldn’t see us. We’d pack a sleeping bag and one of us would sleep on the floor.

I didn’t feel poor as a kid, but in my early 20s I started realizing some people spent money way differently than I was taught. Like a buddy who’d spend $100 buying women shots, or my coworker who got a new luxury car every couple years.

I thought they were stupid, but it wasn’t long before I bought a BMW, dropped $200,000 on a condo, and started a new hobby flying airplanes.

I get emails all the time from people like Karen. She wrote:

“I was going through a rough patch at work and feeling unhappy with where I found myself. More like put myself. I’m smart, I went to college, have zero debt, have a really great, well-paying job, and sincerely felt, “This is it? This can’t be it. Is this really how I want to spend the next 30 years?”

It’s easy to slip into a lifestyle where we work to earn, and earn to consume. I did this, and while it’s nice to have nice things, eventually more stuff doesn’t really make you any happier. And when you realize this, you have a choice: Continue to live a life where you fill it with more stuff, or design a life filled with stuff that’s important to you.

What can you do with your time that’s important?

Bronnie Ware spent years talking with people about to die. They all wished the same thing: That they had been happier, stayed in touch with friends, expressed their feelings, and hadn’t worked so much. Number one was: I wish I’d had the courage to live a life true to myself, not the life others expect of me.

What they’re saying is to live your life filled with stuff that’s important to you. Okay, but how do you figure this out?

Ryan Holiday is one of my favorite people, and his article on deciding your why helped me build a framework around this. I started asking myself what’s important to me, and at first I came up with lame stuff like “freedom” and “flexibility.”

But I dug deeper, and “freedom” became “time” and “time” turned into the question, “What would I do with it?” and that forced the answer:

Work on what I’m passionate about, and not be motivated by money

Have enriching experiences through travel

Challenge myself, and continue to grow

Have an impact on the greatest amount of people

Now, when I’m faced with a decision about a direction to take my life, or what goals I should set, this is the list I pull out to guide me. And the result is a life that’s optimized for meaning and significance.

Three options for freedom

You can design your life to make sure you have the freedom to pursue what’s important to you. The caveat is every one of these options requires a mindset shift: You need to work to earn, earn to save, and save to invest, so you can stop working.

Mini-retirement

Many of you already do fulfilling work as teachers, social workers, or at non-profits. The pay sucks so you know you’ll never be a millionaire, but you still want a taste of freedom. A mini-retirement, a term popularized by Tim Ferriss in the 4-Hour Workweek, is perfect for you. Tim wrote:

“It is the anti-vacation in the most positive sense. Though it can be relaxing, the mini-retirement is not an escape from your life but a reexamination of it – the creation of a blank slate. This is also different from a sabbatical. Sabbaticals are often viewed much like retirement: as a one-time event. Savor it now while you can. The mini-retirement is defined as recurring – it is a lifestyle.”

I love this idea, and the execution is simple: You save up 1-12 months of spending money, and then go live your life. Travel through Southeast Asia, work on what’s important to you, or hike the Pacific Crest Trail.

30-year retirement

Most people work until their 60s for the conventional idea of a 30-year retirement. This includes plenty of TV, mall walking, and watching squirrels or something. The risk is a lot can go wrong between now and when you’re 65 – like you could die – and did you ever have the time to do what’s important to you while you still could?

Money-wise, the conventional 30-year retirement uses what’s called a withdrawal rate of 4%. This means you can withdraw 4% from your savings and investments every year for 30 years, with little risk of running out of money. To figure out how much money you need for this, take your annual spend and multiply it by 25.

Example: If you spend $30,000 you need $750,000 ($30,000 x 25), or if you spend $80,000 you need $2,000,000 ($80,000 x 25).

Early retirement

Early retirement is the definition of wealth, because you don’t have to work to finance what’s important to you.

You can use the same calculation for a 30-year retirement – annual spend multiplied by 25 – because you’ll probably earn money at some point either from hobbies or part-time work.

But if you truly want to retire early, like for 45 years and beyond, you use a withdrawal rate of 3.5%. To calculate how much you need for this, take your annual spend and multiply it by 28.5.

Example: If you spend $35,000 you need $1,000,000 ($35,000 x 28.5), or if you spend $70,000 you need $2,000,000 ($70,000 x 28.5).

My challenge to you

Like other dot-com millionaires, Elon Musk falls into the early retirement category. He could get drunk every night, and spend his time traveling between his properties. But that isn’t what’s important to him:

“I’m interested in things that change the world or that affect the future and wondrous, new technology where you see it and you’re like, “Wow, how did that even happen? How is that possible?”

What’s important to him is solving big problems like space travel and multi-planetary living, so that’s what he’s doing. If you ask yourself what’s important to you and have a vague answer like “I want to be happy, and have a nice family, and be rich,” well, that doesn’t really mean anything.

Get a sheet of paper, and start writing down how you want to live. Then figure out the money part. Because when you do it this way, and you’re at the end of your life about to die, you’ll be able to say, “I’m glad I did that,” instead of, “I wish I had.”

Like this article?

If so, sign up and never miss one. Plus, I’ll send you my free investing guide to start having your money work for you.

First Name*

Email*

Comments

This field is for validation purposes and should be left unchanged.

Jared Jim

Write it on your bathroom mirror and read it every single morning.

We all need a reminder now and then on what the point of life really is. We have so much more material wealth than we need, and we spend way more than we should on frivolous things. We get caught up in the meaningless pursuit of things and stuff, and forget to focus on the work that will leave a lasting impact.

I don’t want to retire at 65 after spending my youth and health working 9-5 just to have a slightly larger house and a slightly newer car.

We thought hard about doing the mini-retirement model, but ultimately decided that that wouldn’t be as satisfying for us, and the type of work that we’re doing for our last few pre-retirement years is work that would be much harder to do in stints. Plus, honestly, I’m just a bit risk-averse, and would have a hard time quitting a great job with nothing else lined up knowing I would need a job again in the future. So ER makes total sense for us, and we’ll achieve it by age 41 and 38… later than some, far earlier than most! 🙂

Great Post. I’ve been interested in these for a while. The idea of doing what you don’t enjoy for 30 , 40 years so you can then retire and be free to finally do what you enjoy seems foolish to me. A great book about this is Prime Time by Marc Freedman. He takes us through the ” History” of retirement – pre – industrial, post industrial, social security, Dell Webb starting ” Age segregated retirement communities” and the ” Selling” of retirement in the 60’s & 70″s when retirement was marketed with commercials and advertisements- mostly by insurance companies – as a life of fantasy, sipping drinks on a tropical island all day. In reality many folks fully retired become lonely and start going to Doctors and talking about their
ailments a lot.

A point you make clearly that I really like is that the date you can retire is equally a function of 1) the size of your nest egg, and 2) your projected spending, i.e., lifestyle, in retirement. Most of what we read focuses only on #1. But depending on how we want to live in retirement, a huge nest egg is by no means required!

I had just turned age 40 and after 6 months of reaching my engineering career-mindset goals realized that there has to be more to life than this. That is when I committed to retiring early. Took 11 years to escape the rat race and be free to work only when I want to, or not. 10 years for the financial side, another year for the non-financial aspects.

Fear of the unknown. Walking away from a long career even when you no longer enjoy it, like it, or want it and have the numbers you believe to pull off early retirement goals still caused me great pause. When I retired Dec 2009 we were just coming out of the bottom of the recession and there was no way to know what would happen next with the economy and investments. I think everyone experiences some hesitation pulling the trigger and for me it was amplified because of all the Historic-Firsts with that recession. I don’t know for sure but I would think its much like a first attempt to sky dive. It goes against every instinct regardless of all the preparation that was done. Early Retirement goes against the norms of this society and requires being somewhat of a risk taker. At some point the data that supported my decision overcame any of my fears of leaving the plane. I had a lot of plans of what I wanted to retire to. Tracking financial numbers is easy for readiness. Measuring and then gaining the confidence to know that I don’t know what will happen but as long as I always move forward things would work out for the best took me a little longer.

disqus_pWPIgY7Xpm

Thanks for this article. Quite easily one of the most inspiring for me.

A huge next egg may not be required depending on how you want to live in retirement; however, for me it’s not the potential lifestyle but the unknown of how long I will actually live and what medical problems might occur in the last few years. (I’m extremely healthy, but the majority of medical expenses occur in the final couple of years, and at age 90-100, that could mean a nursing home or full-time at home nurse = big bucks!) Of course there’s long-term care insurance and other options, but that is still costly. http://www.sempermoney.com

Hey Chris, love this article. Have read plenty of FI articles and this is probably my favorite one as it really just sums up all the important things in one.

I work in Finance and thought the meaning of life was to make crazy amounts of money like and I was one of those money hungry shits. Then I took a transfer abroad to work in Africa, and did some extensive traveling that opened my eyes. Made me realize also that I don’t need millions of $ to “retire” and i also don’t need to spend much to be happy. Seems like too many people get lost in financial adviser advice telling them they need at least 2m to retire just so they can keep their clients around longer and earn more fees. There’s more to life than working and paying bills.

I’ve only recently started taking the savings and FI game seriously but as much as I dislike my job, nothing else will pay me anything close so I will stick it out for a few more years. Currently 30 with $250k in non real estate assets, and saving around $100k a year. Have an apartment in Manhattan as well that I will rent once FI hits so hopefully that is worth something decent as time goes. Hoping to hit FI by 35 to pursue that second life!